Story at a glance
- With Repubulicans calling for cash payouts to Americans, attention is shifting back to the idea of Universal Basic Income, which features no-strings-attached stipends to the poor.
- Several UBI pilot programs have been launched around the world, many of them small-scale and privately funded.
- Lower-income residents of Stockton, Calif., are receiving $500 a month over an 18-month trial period in a pilot program being closely watched by politicians and policymakers.
Senator Tom Cotton (R-Ark.) is the latest to come out in favor of cash payments to the American people in response to the coronavirus outbreak. Cotton gave the example of giving a family of four $4,000 per month "for the duration of the crisis." Sen. Mitt Romney (R-Utah) has already raised the idea of a one-time injection of $1,000 per American. Former Democratic presidential candidate Andrew Yang tweeted, "I'm pumped about it actually."
During his presidential campaign, Yang met with ridicule and raves for his signature universal income (UBI) plan. His plan was to give $1000 a month to every American over the age of 18.
But UBI is not a new concept; it’s been advocated in various forms for years, and it was put into practice in Stockton, Calif., last year.
Stockton is only an hour-and-a-half drive East of San Francisco, but the differences couldn’t be greater. One city has some of the most expensive real estate on the planet, while the other has one of the highest rates of unemployment and bankruptcies in the nation.
Yet, Stockton’s 29-year-old mayor Michael Tubbs has the moxie of start-up tech entrepreneur. Among other innovative programs he has implemented to revitalize his ailing city, the 13th largest in California, he has been giving a stipend of $500 a month to the city’s poorest residents since February 2019. No strings attached.
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The city released the first set of results in October 2019. Most participants had been using their stipends to buy groceries and pay their bills, according to the data analyzed by Business Insider.
On average, participants in Stockton's trial spent about 40 percent of their stipend on food and another 24 percent on sales and merchandise, including trips to Walmart or dollar stores, Business Insider reports. Another 11 percent went to paying their utilities, and about 9 percent went to buying gas and repairing their cars.
Participants spent the leftover 16 percent on needs like medical expenses, transportation, education, insurance, recreation and self-care, according to Business Insider.
All in all, the research found that participants made "really rational" economic decisions with their stipend during the first five months of the program, Stacia Martin-West, an assistant professor at the University of Tennessee College of Social Work, told CityLab. She was also the co-principal investigator on the project
Some economists say stipends may save money over the long run by giving families the breathing room and resilience they need to weather setbacks and improve their lives over time. Studies of Cherokee youth, whose families received windfall supplements from a casino, showed they committed fewer crimes and were healthier, saving the government money in health and protective services.
There is vocal opposition, however, that argues the recipients of these stipends will spend the free money unwisely and that a UBI on a large scale, let alone nationally, would be too costly for taxpayers to bear. Watch the video to learn how this social experiment is playing out so far.
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